You write off the Lib Dems at your peril, warned Tim Farron MP. And the nation, in a collective gesture, said "ooh, I'm so scared". But it isn't just the Liberal Democrat president who thinks the party is onto a winner. Nick Clegg, in his conference speech last September, reassured the faithful that there was a future for the party, not "as the third party, but as one of three parties of government".

Is it really plausible that the Liberals will ever be in government again? At present, they are on a par with Ukip in terms of popular support. Since they didn't win the fight on proportional representation – partly because they signed up to a policy that wasn't proportional representation – this will work out badly for them in terms of seats. They may be left with no more seats in the next parliament than the wedge of Northern Irish parties that failing governments turn to when they need to win key votes.

So where is the peril in writing off the Liberals? Farron reminds us of the unique selling point of the Liberals, their being the historic party of vacillation. The Liberals, he says, "are the only party able to deliver both a strong economy and a fair society." In practice, what this means is delivering welfare cuts, while opposing the Tories demonology about "shirkers" that goes with it. Or, if you like, solving the crisis of old age care by cutting the winter fuel allowance. Above all, promising to abolish tuition fees, then tripling them while arrogantly telling students to "grow up", then apologising for having made the promise to abolish them in the first place. But even if there was a whisper of substance in the Liberal commitment to a "fair society", their complicity in austerity is destroying the niche they have attempted to occupy as "honest brokers" between two unpalatable alternatives. The middle ground is being destroyed.

That is not the only aspect of the Liberal brand whose shelf life has long since expired. In an attempt to make good his warning, Farron dredges up the party's lukewarm opposition to the war in Iraq. But that was all a long time ago, under a different leadership, before the Orange Book coup and coalition with the Tories. The party's opposition lasted only as long as it took for British troops to arrive in Baghdad. In reality, there seems to be little of principle today to distinguish the Liberals from their Conservative coalition partners.

One of Clegg's admirers, Simon Jenkins, allows us to understand the role of the Liberals in the future. Coalition with the Liberals, he points out, has helped Cameron to be truly radical. "In year one he boldly sought serious review of pensions, health and social benefits," Jenkins enthused. This may not reconcile angry Liberal voters: gutting welfare and pensions, and privatising the NHS. But the voters are not who count. Clegg's role is to be a kingmaker in future coalitions.

And why not? There are parties and party leaders across Europe who are willingly immolating themselves in order to implement austerity measures and appease the gods of finance. For Nick Clegg, to collapse in the polls is a relatively minor loss. He expects economic growth to resume at some point before 2015, and Osborne to introduce an inflationary, give-away budget just before the general election. At any rate, he has established that his leadership can handle the levers of office while keeping the base disciplined and passive. With party identity fragmenting over the long term, coalition governments become an increasingly permanent likelihood. This is what he meant when he promised his members a future as a party of government.

But even taking this as the starting point, the Liberals are still kidding themselves. The closest they have ever got to taking office was in 2010 when they received 23% of the vote. They haven't turned that into any substantial Liberal reforms. They have now lost key constituencies, such as students and former Labour voters, who are unlikely to return. They're losing deposits. Their membership is collapsing. Who exactly is going to be left to fight "tooth and nail" for the party's 57 seats, as Farron claims? At best, they can go back to sitting on the benches with the Unionists and Scottish Nationalists, asking polite opposition questions. This is the problem with a perspective from the top table: it leads to insularity, a disconnect from the real world. What looks intelligent and hard-headed from the inside simply appears foolish to everyone else.

Never fear writing off the Liberals. They should be written off. They're Lib Dead, Lib Dumped, Lib Demolished, and Lib Derelict. The next election is shaping up to be a Liberal Democide, a Liberal Defenestration, a Liberal Democrash. And it will be Liberal Delicious.